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40. What is the expected return for the following portfolio? (State your answer in percent with...

40. What is the expected return for the following portfolio? (State your answer in percent with two decimal places.)
Stock      Expected returns      Investment
AAA              34%             $400,000
BBB              29%             $1,100,000
CCC              19%             $1,500,000
DDD               5%             $1,400,000

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Answer #1
Stock Expected Returns (ER) Investment Portfolio weight (w) Product (ER x w)
AAA 34% 400,000 9.09% 3.09%
BBB 29% 1,100,000 25.00% 7.25%
CCC 19% 1,500,000 34.09% 6.48%
DDD 5% 1,400,000 31.82% 1.59%
4,400,000 100.00% 18.41%

Therefore, expected portfolio return = 18.41%

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